Hat tip to Small Dead Animals
WNN (World Nuclear News) — November 14, 2012
EOn continues to struggle under German energy policy, with gas generation made “barely profitable” by pro-renewable market arrangements and nuclear generation slashed and taxed by government decree.
The utility has summarised its performance from January to the end of September, explaining to shareholders that it would honour dividend predictions for 2012, but would revise ambitions for 2013 and 2015. Despite a worsening outlook, the company still recorded pre-tax earnings of €8.8 billion ($11.2 billion) with ‘underlying net income’ of about €4 billion ($5.0 billion) for the first nine months of 2012.
One problem is that renewable generation is given priority access to the grid when it is available. This sometimes prevents gas-fired generation from operating during peak hours and has altered the economics of gas to such an extent that it is now “barely profitable to operate,” said CEO Johannes Teyssen. “In most European markets, the gross margin for gas-fired units is approaching zero or is indeed already negative.”
“Paradoxically, this benefits carbon-intensive lignite-fired assets which are more harmful to the earth’s climate, whereas flexible, climate-friendlier assets are barely profitable,” said Teyssen.
Moreover, the company does not benefit from good enough renewable performance to balance this negative effect of the energy transition. Despite the issue outlined above, oil, gas and coal produced 61% of EOn’s power generation and brought in €1.2 billion (69%) of pre-tax earnings from generation. Renewables produced 11% of power, but reported an operating loss of €67 million that actually reduced pre-tax earnings by 3%.
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